Al-Arafah Islami Bank’s new board faces allegations of corruption
Special Correspondent :
Following the political transition on August 5, Bangladesh Bank dissolved the board of directors of Al-Arafah Islami Bank due to alleged corruption and mismanagement by former Vice Chairman of S. Alam Group and ex-Chairman of AIBL, Abdus Samad Labu, as well as Khalilur Rahman, owner of KDS Group, and his son Selimur Rahman.
However, concerns have emerged regarding the competence and integrity of the newly appointed interim board members.
Unlike the previous board, which used to finalize investment proposals and other banking decisions within three to four hours, the interim board is reportedly taking weeks to make decisions.
As a result, customers are losing confidence and shifting their business to other banks. The frequent board meetings also lead to increased honorarium costs, financially burdening the bank.
Despite their lack of experience in managing a large institution like Al-Arafah Islami Bank, some board members have allegedly engaged in unethical practices, including accepting bribes to appoint senior executives.
Around 15-16 individuals have been recruited for high-ranking positions such as Additional MD, EVP, SVP, and AVP, with unjustified salary increments.
These unnecessary appointments have significantly increased operational costs, further straining the bank’s financial health.
The interim board has also been accused of sidelining existing bank officers for key positions and instead favoring external candidates based on financial transactions.
This practice has reportedly demoralized the bank’s existing workforce, affecting their motivation and performance.
Another major concern is the selective loan renewal process. For instance, the interim board reportedly renewed a loan for a specific client from the Uttara branch at a 7% profit rate, significantly lower than the bank’s current deposit return rate of 12-13%.
This has sparked widespread controversy in the media, severely damaging the bank’s reputation.
Despite almost a third of the year having passed, the board has failed to approve the bank’s annual budget. Even after five to six meetings, no decision has been reached; further showcasing inefficiency and indecisiveness in governance.
It is alleged that the interim board is aligning itself with KDS Group, one of the entities previously accused of large-scale financial irregularities.
The board members even visited KDS Group’s office in Chattogram, raising questions about their impartiality.
Additionally, a junior officer from KDS Group, Kazi Shahed Jamil, was allegedly fast-tracked to the SVP position in violation of banking regulations, with Selimur Rahman maintaining close control over the bank’s internal affairs.
Despite Bangladesh Bank’s BFIU investigation revealing serious irregularities involving officials appointed by Abdus Samad Labu and Selimur Rahman, the current board has taken no action against them.
Instead, efforts are reportedly being made to shield these individuals from legal scrutiny.
At a time when the bank is struggling with financial instability, the board has approved a substantial budget for a T20 inter-cricket tournament in Sylhet. This has raised concerns over the priorities of the current administration.
The growing concerns over inefficiency, corruption, and favoritism have led to calls for an immediate overhaul of Al-Arafah Islami Bank’s board. Experts argue that the current directors lack the expertise and ethical standing to lead a major financial institution.
Banking professionals and stakeholders urge the authorities to appoint a more competent and transparent board to restore stability and trust in the institution.
Unless decisive action is taken, the ongoing mismanagement could lead to further financial deterioration of the bank, ultimately harming depositors and investors.
Sources alleged that the new board of Al-Arafah Islami Bank has engaged in nepotism and financial dealings to appoint unnecessary Additional MDs, EVPs, SVPs, VPs, and AVPs with excessive increments. Instead of promoting internal officials to fill vacant positions, the board is appointing preferred candidates through financial transactions.
Additionally, a large borrower from the Uttara branch received a loan renewal at only 7% profit, while the standard rate is 12-13%, raising concerns about fairness.
Despite several meetings, the board has failed to approve the bank’s budget, delaying crucial decisions and increasing expenses. Meanwhile, significant funds were allocated to a T20 cricket tournament in Sylhet, despite the bank’s financial struggles.